Today KNG will explain the difference and benefits between a Structured Products and standard investments, using an example. For this case, we will use Alphabet formerly known as Google (although Alphabet in this example could represent any direct investment in an index, ETF or Equity).
Why invest in a structured product with Alphabet (GOOGL) as an underlying, over just investing into Alphabet shares directly? Why would you choose to receive a maximum 8.86% p.a. return on your Alphabet investment when you could potentially make more if you invested directly into the stock and its worth went up?
Let me tell you why investing in structured products favours some investors!
The maximum annual return you can make off this investment is 8.86%, this is accompanied by the safety of the investment: Protection Barrier 60% and Coupon Trigger 70%. There must be some give and take with investments e.g. you can’t have absolute safety and a huge Guaranteed return. A Structured Note caps potential return in exchange for safety if markets fall. So it’s a trade off that makes sense – reduce risk which reduces “potential” unlimited return.
If Alphabet isn’t performing very well, client money is kept safe by low parameters (e.g. Protection Barrier) an can still be receiving an income of 8.86% even if the stock price falls (Coupon Trigger). If clients were directly invested in Alphabet, when the stock goes down, so does the value of the capital you have invested.
Do you worry that your structured products aren’t able to withstand market fluctuations?
Well worry no longer, as you are able to minimise the risk in your investment and protect yourself as much as you can against market fluctuations using the Barrier and Triggers. This can be through implementing a low protection barrier on your investment, so that the underlyings are less likely to breach it. This can also be done by including the memory feature so that if you miss a coupon due to a sudden fluctuation in the market then there will be opportunities to recover this coupon at future observations.
Investing in Indexes, such as the FTSE 100 or S&P 500, rather than equities can also reduce any effect of market fluctuations.
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There are plenty of benefits when investing with KNG International Advisors’ structured products.
We can customise your investments to meet your needs so that you are in full control of your investment by adapting Barriers and Triggers to add protection or increase regular coupon payments when markets fall. You can make your investments as safe or as adventurous as you’d like.
When customising your investment to your personal needs, you have many options to choose from.
Why structured products over other investments?
Structured Products provide sophisticated solutions that can be adapted to the needs of every investors.
Structured Products provide sophisticated solutions that can be adapted to the needs of every investors.
Last but not least, because they are products that offer access to the markets without requiring investors to have direct holdings in the underlying assets, structured products can lessen the impacts of capital market turbulence.
At KNG, we will be with you every step of the way!
We provide product reports on your investments which we will send out frequently to our clients (IFAs) to ensure they are up to date on their investments.
We will also notify our clients (IFAs) if there are any changes in their investments, along with all the information they will need to make decisions if needed.
Contact Us
If you feel ready to invest in structured notes, contact us for a free consultation to see what type of note best suits your capabilities and needs.
Fuentes: KNG International Advisors.